A recent report by the Cleantech Group shows that venture capital funding for the third quarter totalled $ 1.59 billion in Europe, North America, India, and China, bringing the 2009 total up to $3.8 billion. Dallas Kachan, Managing Director of the Cleantech Group, asserted that this rebound in VC for clean technology stems from government action, stating that “the billions in government funding being allocated globally in clean technology have begun emboldening private capital, which has in turn helped propel clean technology to the leading venture investment sector, now eclipsing biotech and IT.”

Scott Smith, the U.S. leader of Deloitte’s Clean Tech practice, cited investment tax credits as the spark for this surge in funding for clean technology, stating that “the extension of tax credits for renewable-based power generation along with government stimulus and regulatory requirements to meet renewable portfolio standards are helping to drive continued investment on the part of VCs and utilities into the cleantech sector.”

The largest recipient of this funding was solar power, which received $451 million of venture funding, accounting for 28 percent of the total. While this figure is up 13 percent from the second quarter of 2009, it is still a significant decrease from the third quarter of 2008, when solar power ventures raised $1.2 billion. Transportation, including vehicles, biofuels, and advanced battery technology, was the second largest recipient at $383 million. Energy efficiency, which encompasses everything from energy efficient buildings to efficient light bulbs, was the third largest sector at $110 million.

North America, at 67 percent of the total, is the region receiving the largest share of VC funding. California was the single largest regional recipient, with 61 percent of the North American total, while Colorado came in second with 4 percent. Europe and Israel received 29 percent, and China received 3 percent of the funds accounted for in this report.